This post was contributed by guest author: Anand Rajendran

Anand Rajendran is a freelance writer living in Chennai, India. His interest in personal finance and budgeting began when he was earning an MFA in theater, living in one of the most expensive cities in the country (Chennai, TN) on a student's budget. Today, he writes for some websites and keeps up his Classic Car Insurance company named Sysive in the UK.

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Driving Rates are Rising at an Astonishing Rate These Days. Is There Any Hope In Sight For A Discount?

It was only 15 years ago when Auto insurance rates were at an all-time low. Cut to 13 years later, now they seem to be doing the exact opposite.

What Gives?

It’s simple. Americans seem to be driving more. Americans are spending more time on the road. Due to the employment rates going up, there is cause for people to start driving again. Drivers have needed again on the job.

It’s also due to the cheaper gas rates. When you don’t have to spend that much on gas, then more people want to be out on the road more. There is a downside to all of this driving, though. This downside is one of the leading causes for the Autoinsurance rates going up.

It’s Called an Accident

Accidents come in all shapes and sizes. There are many reasons for the increase in accidents happening on the road. Some tend to run into unsafe drivers. Others tend to do some dangerous things while driving. Texting is one of these things. Though it’s illegal in some states, many people still insist on texting. They insist on doing it while they are driving. It means these people are not watching the road. Whether the individual is not watching the road, it’s going to lead to accidents.

There was a study done on this recently. It said about 87% of all drivers have admitted to being foolish on the road. It is why the rates have been going up. The other issue with this hits on the “claim” side of things.

“Most of the time there is a complaint involved for something like this. At this moment, there are so many complaints being dealt with; it tends to get stressful. Some have been handled with ease, while others do not. We are being hit with a major double whammy. When you combine both of these together, it’s not pretty for the insurance companies. It is why the rates are rising.”

What Else Factors in?

It is a question many in the industry are asking. There have to be other contributing factors for the high insurance rates? Yes, there are other factors. One of these factors has to do with the medical costs. When an accident happens, eight times out of 10 there are medical expenses added in.

The medical expenses vary per situation. Some have only minimal injuries, while others have more severe injuries. Each of these has to be handled with care and integrity. Someone has to pay for the medical costs. The people involved in the accident are not always capable of paying. The health insurance might only pick up a small piece of the pie.

That leaves the insurance company to pick up the slack for many of these claims. To cover these costs, the rates have to go up. You have the auto repair costs to consider too. The same rules apply here. Sometimes the insurance company is left to pick up the repair costs. It can add up too.

Everything Is Going Up

“Car insurance seems to be above the typical cost of inflation. The numbers to the payouts are constantly going up. Medical bills are out of control right now. It is happening especially when it comes to the bodily injury claims”.

-Penny Gusner, consumer analyst, Insure.com

It is going on quite a bit with the younger crowds. They all want to own their vehicles, do their own thing. Sometimes that doesn’t translate to taking care of themselves or others on the road. It leads to more accidents.

Insurance Companies are Looking to Help Their Clients Out

Some automatically assume the insurance companies are the bad guys in this. They are not. Some of them are trying to keep up with it all. Some are looking to help out their clients, but this can only go so far. They want to make a compromise and offer low rates. It’s hard when you have customers making it more difficult to you.

“We try to adjust based on a few factors. We take a look at what the current rates are for others companies. We check a driver’s record. We watch the history of payments and payouts for claims. Sometimes it’s the drivers who are doing the scamming on us. We have to protect ourselves when this happens.”

Anand Rajendran is a freelance writer living in Chennai, India. His interest in personal finance and budgeting began when he was earning an MFA in theater, living in one of the most expensive cities in the country (Chennai, TN) on a student's budget. Today, he writes for some websites and keeps up his Classic Car Insurance company named Sysive in the UK.